GBP/JPY Price Forecast – British Pound Continues Noisy Behavior

The British pound initially tried to rally during the trading session on Monday to kick off the week but gave back the gains rather early. I think at this point we have a lot of exhaustion in this market and it does make a certain amount of sense that the ¥150 level has caused some resistance. Not only is it a large, round, psychologically significant figure, but it is also an area where we have seen selling pressure. Furthermore, this is a market that has been going parabolic for some time, so quite frankly a pullback is necessary.

GBP/JPY Video 2.03.21

To the downside, the ¥147.50 level is support as we had seen during the trading session on Friday, but I think there is even more significant support near the ¥145 level. At that point in time, there is a certain amount of psychological support just waiting to happen, and then we also have the 50 day EMA racing towards that level as well. It would be a little bit of a healthy retrace, in a market that had gotten far ahead of itself.

Eventually, the market is going to go looking towards the ¥150 level again, and if we can break out above there then we should continue to go much higher. I think it makes sense that the very least we need to pullback in order to build up the necessary momentum to break out, and it could take multiple attempts. All things being equal, it is not until we break significantly below the ¥145 level that we need to worry about the overall uptrend.

For a look at all of today’s economic events, check out our economic calendar.